Missouri tax credit covers SBA loan guarantee fees

Missouri Gov. Mel Carnahan July 13 signed into law legislation that provides immediate financial assistance to Missourians in the form of a state tax credit for any U.S. Small Business Administration guaranteed loan fees paid on loans secured by the SBA's 7(a) and 504 programs.

The new law allows borrowers immediate eligibility for the tax credit if the guarantee fee is paid on or after July 13.

An eligible small business, as defined by the Internal Revenue Code, will be allowed a credit against the tax otherwise due in defined Missouri taxes in an amount equal to any amount paid by the eligible small business to the SBA as a guarantee fee pursuant to obtaining SBA guaranteed financing, and to programs administered by the U.S. Department of Agriculture for rural development or farm service agencies.

The tax credit effectively reduces the cost of obtaining SBA financing. According to an SBA release, the credit has the potential to save SBA borrowers several thousand dollars in Missouri income taxes.

On a $1 million SBA loan, the guarantee fee is $25,937.50, which would become a credit against a small-business owner's future tax liability.

"This is advanced thinking on the part of Missouri," said Bruce Kent, SBA regional administrator. "We certainly want to thank the state legislative proponents of the amendment to the bill, which provided for the legislation, for taking the lead."

"The tax credit will provide incentive for small-business owners to expand, creating jobs and additional economic development in the state of Missouri," said James R. Combs, branch manager of the Springfield SBA office.

Oklahoma and Rhode Island have passed similar laws in previous years.